Oceans Umhlanga development still on the rocks
The posh complex has been set back several months after a second contractor had to be replaced following a move into business rescue
The completion of businessman Vivian Reddy’s imposing R4.3bn Oceans Umhlanga development – already fraught with delays and months behind schedule – has been pushed back further, apparently partially due to with construction giant Group Five’s descent into business rescue.
Work on the project, vaunted as the largest mixed-use development in SA, first stalled in October 2018.
The development – set on Umhlanga’s plush beach promenade – comprises several “phases”, including a sprawling shopping mall, exclusive residential flats and a five-star Radisson Blu hotel.
Since phases need to be constructed in unison, one stalled area of the project affects the others.
Oceans Umhlanga’s woes began when construction firm Liviero Building, one of the development’s contractors, was blamed for delays in construction.
In a Facebook post, which was later removed, the Umhlanga Urban Improvement Precinct [UIP] said work on the mall and residential site had been halted “due to the business rescue of Liviero Construction”.
This, it said, resulted in the developer having to negotiate with a new construction joint-venture entity.
Liviero, at that stage staring down liquidation, denied that it was responsible for the work stoppage and claimed that non-payment from developers on two occasions had caused construction to cease – something Reddy vehemently denied.
There has been no shortage of financial inflow to the development, with hundreds of flats sold before the building had even risen above eye level.
The luxury flats are advertised as ranging from R2,5m for a bachelor pad to R50m for a penthouse.
When Times Select first reported on the construction stoppage, Reddy and Rob Alexander, of Ducatis Properties, moved to allay fears that Oceans was taking on water.
“All we can state is that work had temporarily stopped due to certain contractual complications which has resulted in us appointing a new joint-venture construction company for the development,” they said at the time.
“Once the new joint venture partners finalise their agreements and negotiations with our professional team, the project will resume, which is expected to be in a week’s time.”
Last month, Group Five, another contractor on the project, filed for business rescue. The contractor and several peers, including Basil Read and Erbacon, have succumbed to a depressed construction market.
In response to questions from Times Select, Group Five spokespeople Peter van der Steen and Dave Lake conceded that the business rescue process had resulted in delays.
“The business rescue practitioners are assessing each project for its viability and securing financing to recommence viable projects. Unfortunately, it is a massive task and takes a huge amount of resources and time. Progress has already been made with a number of projects and is continuing,” they said.
The company was locked into various joint ventures and “suitable arrangements are being, and have been, made for the joint ventures with joint-venture partners”.
They would not be drawn on the status of the Oceans Umhlanga Development specifically.
Oceans Umhlanga development director Pregan Naicker told Times Select that compromised contractors had been replaced.
"The Oceans development has recommenced with two new contractors being appointed to replace the original contractors with one being liquidated and the other in business rescue. The new contractors are busy with the site establishment. There has been some unexpected delays to negotiate, terminate and to appoint new contractors.
“The mall has been redesigned from a three-floor to a two-floor mall with a square. The entire development will incorporate 2,500 parking bays,” he said.
“There have been some unexpected delays to negotiate, terminate and to appoint new contractors.
“In a few months’ time the skyline of lower Umhlanga will have 10 cranes once construction streams ahead.”
Construction would begin as soon as the revised plans were approved by the eThekwini municipality.
When the development was launched in 2017 the envisaged date of completion was June 2020.